The NAIP is the only organization that has continually monitored topics such as qualified immunity, arbitration and TROs.
Your cause is a noble one, but I give up 66% of the fees I make to mother Merrill to watch my back. I will trust their judgment as to which organizations are best to protect me at this point.
This was the reason a Merrill Lynch broker gave me about his choice not to renew his National Association of Investment Professionals (NAIP) membership. But I don't think he's right. Does the broker/dealer you work for really cover your back? No. Does the SIA protect your interests as an individual working in the securities industry? No.
Let's compare what the NAIP has accomplished with what firms and the SIA have done on the complex matter of qualified immunity.
In 1998, the NASDR submitted a rule change to the SEC that would have given member firms qualified immunity for remarks made on your license. This proposed rule (Rule 1150) would have also implemented a clear and convincing evidence standard for defamation.
The SEC did not approve the rule. We believe it was due to the NAIP's grass-roots letter-writing campaign to both the SEC and Congress. Both the NASD and the SIA submitted anonymous anecdotal evidence supporting the rule.
Why bring this up now? After Rule 1150 was defeated, the SIA sent lawyers to the National Conference of Commissioners in an effort to convince individual states to adopt qualified immunity in revising state uniform securities codes. The justification for this, according to an SIA representative, was that there were too many brokers winning large defamation suits against firms.
When pressed by Alan Foxman, the chair of the NAIP's Government Relations Committee, the SIA could not provide the state rule-making body with proof. The state committee chair then recommended deleting the qualified immunity verbiage from the draft of the code.
What does this mean to you? The chances of being defamed unjustly on your U-5 are greatly reduced. The NAIP and its members have protected your mobility in the industry.
The NAIP is the only organization that has continually monitored and commented on topics such as qualified immunity, arbitration, temporary restraining orders (TROs) and policies affecting your employment record. We are the only organization that has lobbied Congress and regulators about these issues.
There is still much to do. For example:
- The NAIP needs to study whether the secret comment area of the Central Registration Depository (CRD) is doing harm and petition the SEC to stop this practice if it is illegal.
- The use of TROs greatly increased last year. We need to seek legal counsel regarding the possibility that this practice is restraint of trade.
- Employment contracts with noncompete clauses have become ubiquitous, along with widespread use of deferred compensation. We need to address the antitrust implications of these developments.
- We must advance the NAIP's positive developments, including instituting an investor referral program, starting chapters around the country and expanding our attorney referral network.
But we need help to achieve these objectives. The philosopher Epictetus once said, No great thing is created suddenly. This has been the NAIP's philosophy the past four years. During the next four years, help us create a great thing that will protect your back.
T. Sheridan O'Keefe is a registered rep based in Minneapolis, and president of the National Association of Investment Professionals, a trade group for brokers and advisers. The NAIP can be reached at 612/322-6247. He can be contacted at [email protected].
